Broadwind Energy, Inc. has reported sales of $51.4 million for the second quarter of 2013, a 9 percent decrease compared to $56.3 million in the second quarter of 2012.
The decline reflected weaker activity in the Gearing and Services segments, partly offset by stronger revenue in the Towers and Weldments segment due in part to a 42 percent increase in industrial weldments revenue compared to the prior-year second quarter.
The company reported a net loss from continuing operations of $0.2 million or $.01 per share in the second quarter of 2013, compared to a loss of $4.2 million or $0.30 per share during the second quarter of 2012. The improvement was due to stronger operating results in the Towers and Weldments segment as well as the gain on the sale of the company’s idle tower facility during the current-year quarter. The company reported non-GAAP adjusted EBITDA (earnings before interest, taxes, depreciation, amortization, share-based payments, and restructuring costs) of $2.7 million during the second quarter of 2013, compared to $1.1 million during the second quarter of 2012.
Peter C. Duprey, president and chief executive officer, stated, “Our second-quarter results showed the strength of our Towers and Weldments segment in which we booked $52 million of new orders during the period, and announced another $70 million after quarter-end. We have sold out our 2013 capacity, and are now booking orders well into 2014. We expect 2014 production to reach or exceed our design capacity of 500 towers. During the second quarter, we demonstrated a dramatic improvement in productivity and tower through-put compared with last year when we were experiencing production issues associated with manufacturing multiple tower types at the same time. Process improvements that we initiated in 2012 and a generally better mix of towers resulted in strong EBITDA in the quarter.
“Finally we have strengthened our balance sheet by achieving some major milestones, including selling our idle Brandon, South Dakota tower facility for $12 million, paying down additional debt of $6 million and ending the quarter with $18 million of cash.”
The company booked $59 million in new orders during the second quarter of 2013. Additionally, a $35 million tower order from 2010 was removed from backlog due to a change in the customer’s U.S. wind requirements. As a result, net orders for the second quarter of 2013 were $25 million, a 17 percent decrease compared to the prior-year second quarter. Towers and Weldments orders, which vary considerably from quarter-to-quarter, totaled $18 million, net of the $35 million cancellation noted above. Second-quarter net Gearing orders totaled $5 million, a 70% decrease from the prior-year second quarter, reflecting continued weakness in orders from natural gas and other industrial customers as well as less demand for wind replacement gearing. Net orders for Services totaled $3 million compared to $5 million in the prior-year quarter, due to weaker demand for field services, as a number of customers have insourced work during a period of low turbine construction activity.
At June 30, 2013, backlog totaled $143 million, up from $137 million at June 30, 2012. Subsequent to quarter-end, the company announced new tower orders of $87 million, $17 million of which were included in backlog as of June 30, 2013.
Towers and Weldments segment sales totaled $37.5 million in the second quarter of 2013, compared to $37.0 million in the second quarter of 2012. Tower section volume in the second quarter of 2013 was down 12 percent compared to the prior year. The prior-year production consisted of a greater number of lighter, lower-value sections as compared to the current-year second quarter. Additionally, $4.4 million of completed tower sections remained in inventory at quarter-end because a customer first article qualification process was not completed as planned. Revenue for these sections will be included in the third-quarter results. Consistent with the Company’s strategic focus on diversifying end markets, industrial weldments sales of $3.2 million increased 42 percent compared to the prior-year period, more than offsetting the tower shortfall noted above. Non-GAAP adjusted EBITDA for the second quarter was $5.3 million; nearly triple the prior-year second quarter adjusted EBITDA of $1.8 million. The dramatic improvement was the result of improved operating efficiencies and a less variable and more profitable mix of towers. During the second quarter of 2012, productivity suffered due to the production of multiple tower types in that quarter. Towers and Weldments segment operating income for the second quarter of 2013 was $4.1 million, up $3.5 million from the second quarter of 2012 due to the factors described above.
Gearing segment sales totaled $10.4 million in the second quarter of 2013, compared to $14.1 million in the second quarter of 2012. The 26 percent decrease was due primarily to lower demand from mining and natural gas customers as well as protracted manufacturing issues with a new line of gearboxes for an industrial customer. Gearing segment non-GAAP adjusted EBITDA for the second quarter of 2013 was a loss of $0.1 million, decreasing from $1.3 million in the prior-year second quarter due in part to lower volumes and lower margins, partly offset by reductions in fixed costs and lower compensation, bad debt and other professional expenses. Gearing segment operating loss for the second quarter of 2013 increased to $3.9 million, from $1.6 million in the prior-year second quarter. The increased operating loss was partly attributable to $0.7 million of higher restructuring charges and $0.5 million of accelerated amortization as well as the factors described above.
Revenue from the Services segment was $4.1 million in the second quarter of 2013, compared with $5.7 million in the second quarter of 2012. The 29 percent decrease was due in large part to depressed field service activity as a result of very low wind turbine installations across the United States, reflecting the curtailment of development work in late 2012 in response to the uncertainty regarding the production tax credit as mentioned above. This has resulted in wind farm operators insourcing non-routine maintenance projects during this same period. Non-GAAP adjusted EBITDA loss for the second quarter of 2013 was $0.6 million, compared with $.5 million in the prior-year second quarter. As a result of the 29 percent drop in sales, the company reduced headcount during the quarter and reduced SGA costs compared to the prior-year second quarter. Services segment operating loss of $1.3 million in the second quarter of 2013, increased $0.2 million, from a loss of $1.1 million in the second quarter of 2012, reflecting $.1 million of additional restructuring charges in the current-year second quarter as well as the factors described above.
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